Nehebat Isbilen is claiming at the High Court in London that her business adviser Selman Turk "dishonestly misappropriated" £38m of her assets.
Mrs Isbilen paid £750,000 to Prince Andrew and claims Mr Turk had wrongly told her bank it was a wedding gift.
There is no suggestion of wrongdoing by Princess Beatrice or Prince Andrew.
The Duke of York has now returned the £750,000 to Mrs Isbilen.
Mr Turk has rejected the allegations made against him.
This complex court case revolves around accusations that Mrs Isbilen's money was fraudulently used by her business adviser, Mr Turk.
Mrs Isbilen, aged 77, is from a wealthy Turkish business family, but when her politician husband was jailed she wanted advice on moving her assets out of Turkey.
But the High Court has heard accusations that Mr Turk "misappropriated" her assets - and her lawyers have been trying to track down and recover her money.
According to court papers, this revealed that "substantial sums" had been paid to Prince Andrew and Sarah, Duchess of York.
Mrs Isbilen claims Mr Turk advised her to make a "gift" of £750,000 to Prince Andrew, which she was misled into believing was for assistance with her passport.
This amount was transferred from her account on 15 November 2019.
"The representation that Mrs Isbilen needed to make a gift to the Duke of York in connection with her passport [or for any other purpose] was false," says her legal team in their claim of dishonesty against Mr Turk.
But Mrs Isbilen's testimony in an affidavit also says that she saw an email from Mr Turk to her bank explaining the £750,000 payment as being a "wedding gift" for the Duke of York's daughter, Prince Beatrice.
This claim was "entirely false" says Mrs Isbilen in her affidavit.
A week before the payment by Mrs Isbilen, Mr Turk's firm had also been a winner of an award at the Pitch at the Palace business initiative, headed by Prince Andrew.
Representatives of Prince Andrew have not commented on the ongoing court case.
A spokesman for the Duchess of York said: "The duchess was completely unaware of the allegations that have since emerged against Mr Turk. She is naturally concerned by what has been alleged against him."
The court has heard claims of further payments to the Duke and Duchess of York, via a company called Alphabet Capital.
According to court documents, about £900,000 of Mrs Isbilen's money was paid into this company in two payments, despite her claim: "I did not know about or authorise either of these payments."
This company then made payments to Prince Andrew and his ex-wife Sarah, with Peters and Peters, the law firm representing Mrs Isbilen, claiming Prince Andrew received £350,000.
The discovery of payments to Prince Andrew emerged after a court order allowed a search of Mr Turk's financial dealings.
Court papers show that some of the expenditure had been attributed by Mr Turk to professional costs and unsuccessful investments, but there were claims of significant amounts still to be explained.
Jonathan Tickner, Mrs Isbilen's lawyer, said she had been "the victim of serious fraud and financial wrongdoing", and was determined to pursue her claim against all those involved.
Court documents show that Mr Turk has disputed the allegations and disagrees with Mrs Isbilen's understanding of how her assets have been handled.